IDBI Bank to increase tech spend to 8-9% of operating expenditure
IDBI Bank has 'immediate plans to invest in digital solutions, analytics, AI', says CEO
 "IDBI Bank to increase tech spend to 8-9% of operating expenditure")
Private lender IDBI Bank will increase its information technology (IT) expenditure to 8-9 per cent of operational expenditure in the medium term from 6.5 per cent in financial year 2023-24 (FY24).
“We have immediate plans to invest in digital solutions, analytics, AI (artificial intelligence) and continue investment in IT Infrastructure including data centres and Cloud. Expenditure is likely to increase gradually to 8-9 per cent,” Rakesh Sharma, managing director and chief executive officer of IDBI Bank told Business Standard.
The bank is increasing investment to improve employee skills within and strengthening subsidiary IDBI Intech, he said. In absolute terms, IDBI Bank is increasing its operating expenditure to Rs 560 crore in FY25 from Rs 330 crore in FY24. Capital expenditure will increase from Rs 180 crore in FY24 to Rs 400 crore in FY25.
Most banks’ spending on IT systems, maintenance and upgrades is about 8-10 per cent of their total expenditure. Banks plan to strengthen their technology as the Reserve Bank of India (RBI) increased scrutiny of IT systems over the past year.
In recent times, the RBI has emphasised on reducing technology glitches that disrupt customers' ability to make transactions.
Private sector lender YES Bank’s technology and IT spending, which also includes capital and operating expenses, comprises nearly 10-11 per cent of its overall operating expenses. IndusInd Bank, another private lender, has said it continues to evaluate and invest in technology infrastructure and is spending nearly 8-10 per cent of its total cost-to-income on IT.
Lenders' core banking systems (CBS) have been in operation for over a decade and due for upgrades. IDBI Bank works on CBS - Finacle platform and would go for upgradation along with other technology systems, said another senior executive of the lender.
"Most banks' core banking systems are quite dated now so they are now assessing whether the systems can handle the rise in digital activity," said Rohan Lakhiyar, partner at consultancy firm Grant Thornton Bharat's financial services risk division.
The other focus area for banks and the RBI is cybersecurity as each new technology integration that banks complete raises operational risk, said Lakhiyar.